Housing sales in the National Capital Region (NCR) saw a notable decrease between July and September 2024, primarily due to limited inventory in the sub-Rs 1 crore segment and rising home prices. According to Knight Frank India, NCR recorded 12,976 units of housing sales in the third quarter, down from 13,471 units in Q2 and showing a nearly 16 percent drop compared to the 15,907 units sold from January to March.
Supply Shortages in the Affordable Segment
The supply crunch has been most significant in Gurgaon and Greater Noida, where demand for homes priced below Rs 1 crore remains high. However, the majority of new projects are emerging in the premium and luxury segment, with ticket sizes above Rs 1 crore, leaving fewer options for budget-conscious buyers.
Vivek Rathi, Head of Research at Knight Frank India, explained that affordable housing availability has plummeted, and many homebuyers are being pushed toward higher-priced homes. He noted, “The market could see a revival only if prices stabilize or an influx of sub-Rs 1 crore inventory emerges.” The trend is pushing up prices even further, with properties once priced at Rs 90 lakh now often exceeding Rs 1.1 crore.
Shifts in the Residential Market Segments
NCR’s experience mirrors the national trend in the residential market where mid-segment and affordable housing sales have dropped sharply. Knight Frank’s data reveals that sales in the sub-Rs 50 lakh category declined 14 percent year-on-year in Q3, while those in the Rs 50 lakh to Rs 1 crore range saw a 13 percent drop. However, properties in the over-Rs 1 crore segment are thriving, with sales growing by 41 percent in the same period.
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While luxury segments offer developers better profit margins, affordable housing drives volume, which is essential for long-term market stability. In NCR, a staggering 85 percent of sales were in the premium category (over Rs 1 crore), compared to around 33 percent in Mumbai, and 66 percent in Bengaluru.
Rising Prices and Mortgage Rates Add to Challenges
As new affordable and mid-segment housing projects are scarce, rising home prices and mortgage rates further strain sales. Home prices in NCR and Mumbai both saw a 4 percent year-on-year increase in H1 2024, reaching an average of Rs 4,835 per sq ft. Mumbai alone has witnessed a 30 percent price surge over the last two years, driven by heightened demand for higher-end homes. Additionally, rising mortgage rates, up by 150-200 basis points, have exacerbated financial burdens for buyers in the affordable segment, making homeownership less attainable for first-time buyers and investors alike.
The double impact of rising property costs and interest rates has kept many potential buyers on the sidelines, waiting for prices to stabilize before making purchases. Until significant changes occur in housing inventory and affordability, NCR’s real estate market may continue to face challenges in its lower and mid-segment housing sales.
